Zimbabwe: Dependence on SA Imports ‘Risky’

ZIMBABWE’S export trade promotion body, ZimTrade, has warned against over-reliance on South African imports, stressing that Harare could plunge into a serious economic crisis should its southern neighbour experience unexpected production and supply challenges. South African producers of basic commodities, automobile services, chemicals, agricultural inputs and farm produce have taken advantage of a significant weakness in Zimbabwean firms’ capacity to service the domestic market, which has triggered widespread shortages of locally manufactured goods.

South Africa and Zimbabwe have intensified trade relations, but the balance of trade has always been in favour of South Africa, Africa’s largest economy. In March, South Africa’s Deputy Minister of the Trade and Industry, Elizabeth Thabethe, flew into Zimbabwe with a delegation of 45 businesspeople to intensify the hunt for new markets for her country’s companies north of the Limpopo. The business delegation comprised companies in the infrastructure (rail, telecommunication and energy), manufacturing, agriculture and agro-processing, mining and mining capital equipment, as well as information and communication technology.

Zimbabwe labour unions are reportedly facing tremendous pressure from workers to campaign against an overflow of South African products into Zimbabwe to allow for the resuscitation of local industries to create jobs, have said Harare had “turned into a supermarket” for South African products. (Huh? strange since so many of the eligible working Zimbabweans have gainful employment in South Africa. Sounds more like labour union politicking)

If South Africa, for example, is to experience a supply hitch, this will be transmitted directly into Zimbabwe’s production and consumption patterns. The appreciation of the rand in the second quarter of 2011, for instance, resulted in price increases on the domestic market.In other words, heavy dependency on imports will leave an economy susceptible to world economic shocks, according to ZimTrade.

Statistics provided by the Department of Trade and Industry (dti) of South Africa in March, indicated that exports to Zimbabwe increased to R15,5 billion in 2011, from R15,1 billion in 2010, while Zimbabwe’s exports to that country increased to R2,9 billion in 2011, from R1,3 billion in 2010. The statistics indicate that South Africa imported US$1 billion worth of goods and services from the Southern African Development Community trade bloc, with 37 percent of the imports coming from Zimbabwe. The dti said imports from South Africa represented 45 percent of Zimbabwe’s total imports. Therefore, according to ZimTrade, “A growing trade deficit could increase the country’s risk of imported inflation and a direct transmission of shocks into the economy.

South Africa has also been Zimbabwe’s major source market for industrial inputs. The United States, Kuwait, China, Botswana and Zambia were Zimbabwe’s other major trading partners in 2011.However, the dti statistics indicated that Harare had narrowed its trade deficit with Africa’s largest economy in 2011 to R12,6 billion, from R13,7 billion in 2010. This translates to about US$12 million and US$13 million respectively

The dti deputy minister, Thabethe acknowledges that “South Africa and Zimbabwe are not only geographical neighbours. The two countries share historical and cultural linkages. Furthermore, South Africa’s economy is inextricably linked to Zimbabwe’s economy due to its geographical proximity to Zimbabwe whose political and economic welfare has a direct impact on South Africa”. Source: The Herald (Zimbabwe)